south east councils facing further reductions in spending

04-08-2014

Total service expenditure by local authorities in the South East region (excluding London) is forecast to decrease by 3.1% on average in 2014-15. Included in the figures are some of the largest reductions in spending on Police (-1.6%), Fire (-1.4%) and Education (-9.2%) when compared to other regions in England. Although some of the fall in Education spending is likely to be due to schools converting to academies, removing their funding from local authority control.

The reduction in Police expenditure comes after the region was the only area forecast to receive an increase in Police spending (0.6%) in 2013-14. In addition, the South East is estimated to receive the largest budget increase in Children’s Social Care (22.4%) and one of the largest increases in Public Health spending (7%).

The data, compiled by the Department for Communities and Local Government (DCLG) and the Chartered Institute of Public Finance and Accountancy (CIPFA), shows that local authorities per capita spending in England will have fallen by 14.5% in cash terms by 2014-15, when compared to the last financial year of the last Parliament in 2009-10.

When adjusted for inflation this represents a steep drop of 29.1%, a significant reduction in the spending power of local authorities in England. This means that spending levels for 2014-15 will in fact have reduced to the same level of spending in 2005-06 in cash terms. In 2014-15 Total Service Expenditure (TSE) has been budgeted to fall by 3.1% to £93.5bn, while last year, budgeted spending excluding public health spend (which was a new responsibility from 2013-14) fell by 1.0%.

Rob Whiteman, CIPFA’s Chief Executive commented:

“The continued sharp downward trajectory of local authority spending in both cash and real terms shows the significant financial challenge councils have faced over the past few years. Many authorities have managed this reduction well and continue to live within their means, but we are now starting to see some councils face real and immediate financial pressures.

“If we are to prevent the financial failure of vulnerable local authorities, we must recognise that some councils have been hit harder than others and will need more support. But also that there is a real and pressing need for fundamental reform of the financing of local government if we are to see it not just survive but succeed and thrive over the coming years”.

The biggest losers in terms of service provision across the whole England will be Housing with a 7.8% reduction in budgeted spending, followed closely by Education with a 7.6% cut to spending. Other areas seeing significant reductions are Culture (-6.3%) and Highways and Transport (-6.2%).

The figures also show variations in average regional budgeted spending by councils. The North-East is estimated to have the largest decrease in council spending (-5%), in stark contrast to the previous year, where they were the only region to see an increase in spending. Local authorities in the West Midlands (-2.9%), East Midlands (-4.1%) and Total South East (-3.4%) will also continue to see large declines in expenditure. The North-West will have the smallest cut in council spending (-1.8%).

ENDS

Notes to Editors:

These calculations are based on budgeted figures for 2014-15 taken from the CIPFA/DCLG Revenue Account Budget Estimates (RA) return. The actual expenditure figures may be different by the end of the financial year.

If not clearly stated figures are not adjusted for inflation.

Local authority expenditure on ‘services to young people and other community learners’ is now included within ‘other education and community budget’ and ‘services for young people’ in 2014-15

The 2014-15 TSE figure with is compared to the 2009-10 and 2005-06 TSE figures excludes public health spend, which is a new local authority responsibility from 1 April 2013 and has been removed for comparative purposes.

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